Since founding Retirement Media Inc. in 2012, Phil Cannella has been on a mission to free the everyday American from the misinformation and biased commentary of the mainstream media. When it comes to retirement-specific advice, Phil Cannella has found the research and information put forth by such media outlets to be lacking, misleading and just plain wrong.
Phil Cannella discussed the latest example of this glaring shortcoming on last weekend’s Crash Proof Retirement Show. “The mainstream media is confused,” Cannella told the listening audience as well as co-host Joann Small, “over what annuities really are. As a result, they’re continuing to offer poor financial advice to people in or near retirement!”
On a recent radio call-in show, a caller asked a mutual fund advisor, “What investment would you recommend if I’m looking for an annual return of 5%? Would an annuity be a good idea?”
Here was the response:
“Do not buy an annuity. Do not put an annuity inside your IRA, it’s totally unnecessary. Find out how much money in commissions you would pay—what kind of liquidity is available within the annuity?”
“This is inferring that money is tied up in an annuity, and cannot be retrieved,” said Phil Cannella. “When you listen to a mutual fund salesman answer that question, as a caller, how do you know if you’re getting sound financial advice as opposed to a sales pitch?”
Phil Cannella has covered this topic dozens of times on the Crash Proof Retirement Show. “Anytime I hear a media outlet confusing people on annuities, I feel an obligationto clarify,” he said.
To clarify, an annuity is an income stream. An annuity is fixed, interval payments made over time. “When you hear the word annuity, that’s what it is—an income stream,” said Cannella. “It’s a pension, a Social Security check, lottery winnings… fixed payments over time.”
Worse yet, however, the mutual fund advisor never clarified the differences in types of annuities for the caller. “They love to lump all different kinds of annuities together by mentioning fees and ongoing charges—which will make you think you’re dealing with a variable annuity!” said Cannella. “Meanwhile, they’re not letting you know about the fixed annuities that can be very beneficial to your retirement account. In a fixed annuity, the investor cannot lose principal.”
So next time you hear an advisor try to steer a person away from an annuity, Phil Cannella recommends you asked the important follow-up questions—is it a variable or a fixed annuity? The answer could make all the difference in your retirement.